Hi HHH,
below are some answers, I hope this helps.
Originally posted by HHH:OK guys, I have been digging around, searching, and asking for advise on my current plans for refinancing my PPOR. Here is what I have come up with. Please give me any comments as to whether it all will work and make sense – I guess mostly if there is something flawed in my thinking.
I am refinancing my PPOR. The new loan amount will be for 264K. My idea is to have 20K as a LOC, and the remaining 244K as an IO loan with an offset account. (Q1: i assume this is possible?)
My plan: All income (wages, business, rent etc) will go into the offset account. Only private expenses will ever be drawn from the offset account. The LOC will be used purely for business expenses and investments. To pay business expenses or to invest, I will transfer the money from the Offset account to the LOC. This transaction is ensure the money stays within the loan for as long as possible, and as I said, to have all business expenses/investments come out of the LOC. This keeps business and private expsenses separate.
Correct
A really cool side effect of this is that every time I draw on the LOC, that once non deductible loan is slowly but surely turning into a fully deductible loan.
If The LOC was set up for investment, then this is deductable debt, providing funds drawn out of the LOC are investment related,[/b]
Having the offset also allows me to take my cash when I make my current PPOR an IP and put it onto the new PPOR. So far so good I hope. Having the LOC allows quick ready access for business expenses and investments.
Correct
I THINK the only thing left to work out is this:
If say I transfer 10K from the offset onto the LOC (to keep business and private expenses separated)and then used to invest, 10 out of the 20K is deductible. If I do it again soon after, what component of the LOC would be deductible? is it now the entire 20K? How is that calculated?
It does not matter where the funds to pay the LOC debt comes from, eg: offset acc, rental income, savings account, The important thing to remember here is that the interest on the LOC is deductable.
Finally, and I guess depending on the answer of my previous qestion, assuming the 20K total LOC is now deductible, how would I go about increasing the LOC from the “standard” part of the loan – is this easy to do? What would be the best way to achieve this with my main goal to make the entire loan eventually tax deductible?
I look forward to hearing comments on the above and would appreciate any futher advise. I am only new to this, so please be gentle…
Cheers[biggrin]
HHH
Hope this helps, good luck.
Kind Regards
Steven
Mortgage Broker
[email protected]
http://www.mobilemortgagemarket.com.au
Ph:1800 820 500
Victoria
PLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
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